Stock Commentary - Europe - week to July 14, 2008

EUROPEAN: bourses gyrated through the reporting week to July 14, but nearly always in the opposite direction to US markets and ending the period significantly lower. The highlight of the week was in ZURICH, where biotechnology firm Speedel rocketed over 89% on the news that Swiss drug major Novartis plans to buy a further 51.7% of the group and eventually the remainder of the company (Marketletter July 4). Novartis, however, declined 1.0%. Meantime, Actelion gained 5.1%, boosted by a deal with UK drug giant GlaxoSmithKline for its insomnia drug candidate almorexant, which involved an upfront fee of $145.0 million and a possible further $2.73 billion (see page 3). In FRANKFURT, Evotec remained in positive territory after its previous week's rise on the back of positive trial data for its Alzheimer's disease drug, while MorphoSys slumped 8%, despite news that the USA's OncoMed Pharmaceuticals has triggered their pre-existing option to extend the current license agreement between the two firms. By the end of the week, European drug majors failed to attract defensive buying in sharply downturned markets, in contrast to Wall Street.

LONDON: share prices were down, with the FTSE 100 3.9% lower and virtually all the drug stocks tracked in decline. SkyePharma plunged 47%, as the company continued to find difficulties in re-financing (Marketletter July14). Phytopharm fell 12.2%, despite a fairly upbeat interim statement. Ireland's Elan dipped 3.8% on the week, despite a 2.4% gain earlier due to an upgrade from Cowen & Co, based on expectations for the firm's Alzheimer's drug bapineuzumab. The only actual gainer was GlaxoSmithKline, up just 0.1%.